The first quarter of 2023 saw positive progress in housing affordability due to solid wage growth, lower mortgage rates, and reduced home prices. However, concerns about affordability persist as supply chain issues in the building materials industry continue and wage growth is expected to slow down in the coming months.
Based on the Housing Opportunity Index (HOI) from NAHB/Wells Fargo, 45.6% of new and existing homes sold from January to March were affordable for families with the median income of $96,300 in the United States. Although this figure is higher than the previous quarter (38.1%), it remains significantly lower compared to the same period last year (56.9%), highlighting the ongoing challenges in housing affordability.
During the first quarter, the national median home price declined from $370,000 in the final quarter of the previous year to $365,000. Additionally, average mortgage rates dropped from a series high of 6.80% in the fourth quarter to 6.46% in the first quarter. On the other hand, the U.S. median family income experienced a 7% increase from $90,000 in 2022 to $96,300 in 2023.
The top five major housing markets with the highest affordability in the first quarter of 2023 were:
- Lansing-East Lansing, Michigan
- Scranton-Wilkes-Barre, Pennsylvania
- Rochester, New York
- Toledo, Ohio
- Pittsburgh, Pennsylvania
Conversely, the least affordable major housing markets were all located in California:
- Los Angeles-Long Beach-Glendale
- Anaheim-Santa Ana-Irvine
- San Diego-Chula Vista-Carlsbad
- San Francisco-San Mateo-Redwood City
- San Jose-Sunnyvale-Santa Clara
Meanwhile, Cumberland, Maryland-West Virginia, ranked as the most affordable small market in the country, with 93.5% of homes sold in the first quarter considered affordable for families with the median income of $89,900.
Similarly, the least affordable small housing markets were found in California. Napa, California, stood at the bottom of the affordability chart, with only 6.6% of all new and existing homes sold in the first quarter considered affordable for families with the area's median income of $129,600.
